Chinese tech giant Alibaba aims to fill Nvidia void with its new AI chip

China’s Alibaba has developed a new chip that is more versatile than its older chips and is meant to serve a broader range of AI inference tasks, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The chip, now in testing, is manufactured by a Chinese company, in contrast to an earlier Alibaba AI processor that was fabricated by Taiwan Semiconductor Manufacturing, the report said.

Alibaba did not immediately respond to a Reuters request for comment.

Chinese tech and AI companies have been focusing heavily on homegrown technology at a time when leading AI chip giant Nvidia has faced regulatory issues in selling its products in the country.

Nvidia’s H20 chip, the most powerful AI processor it is allowed to sell in China, was effectively blocked from sale in the market earlier this year by the Trump administration.

While the U.S. last month allowed Nvidia to resume sales of H20 to China, Chinese firms have been working on processors that could substitute H20. Beijing has also put pressure on tech giants, including Alibaba and ByteDance, over purchases of the H20 chip.

Nvidia developed the H20 specifically for China following U.S. export restrictions on its other AI processors in 2023. The H20 does not have as much computing power as Nvidia’s H100 or its Blackwell series.

Alibaba is China’s biggest cloud-computing company and is among the top customers of Nvidia.

Separately, on Friday, the company reported a 26% jump in revenue in its cloud computing segment for the April-June quarter, beating market estimates, on the back of solid demand.

—Deborah Sophia, Reuters